In a comprehensive equity report, Zuanic & Associates presents an impartial analysis of WM Technology MAPS, a prominent player in the cannabis sector, shedding light on its distinctive market position and potential for growth.
Market Position And Valuation
The senior analyst at Z&A, Pablo Zuanic, articulated, “We initiate coverage of WM Technology with a Neutral rating. Trading at 0.6x sales (compared to 4.5x for similar e-commerce/SaaS stocks), the stock’s valuation does not align with MAPS’ dominant position as the leading online cannabis consumer marketplace.”
Despite its undervaluation, the company’s dominance in crucial markets and a market cap of $142 million underscore its potential in the cannabis sector.
- WM Technology (MAPS) is trading at 0.5x sales and 4.2x EBITDA for the calendar year 2024. Projections for 2025 indicate even lower figures at 0.4x sales and 2x EBITDA.
- In comparison, Vertical SaaS stocks are trading at 5x sales and 17x EBITDA, marketplace stocks at 3.3x sales and 11x EBITDA, and e-commerce enablement stocks at 5x sales and 46x EBITDA.
- Zuanic & Associates calculated MAPS’s enterprise value (EV) at $121 million, taking into account net cash of $28 million and leased net of right-of-use assets of $7 million, excluding the minority interest of $95 million as reflected in the non-controlling share classes.
- WM Technology’s current EV of $121 million translates to a trading multiple of 0.6x current sales and 5x current EBITDA.
Growth Prospects And Challenges
The company envisions growth beyond its primary markets (CA, CO, MI, OK) with the expansion of the US cannabis market. However, the report highlights hurdles in these markets and near-term growth constraints, as evidenced by fluctuating sales and EBITDA figures.
Strategic Shifts And Revenue Streams
The report emphasizes MAPS’s narrowed focus away from being a “one-stop” solution provider. Zuanic explains that the company’s revenue growth strategies include augmenting existing customer bases and venturing into new accounts, despite potential risks from recent pricing structure changes.
Bull And Bear Scenarios
The report concludes with possible future scenarios. The optimistic case envisions MAPS leveraging its market position for substantial growth, while the pessimistic scenario raises concerns about potential struggles due to market saturation and strategic risks.
Zuanic outlined a potential bullish scenario for MAPS: “From a technical perspective, the stock could ascend if cannabis stocks surge on rescheduling news… Additionally, acceleration in the US cannabis market growth should bode well for MAPS.”
On the bear case, Zuanic added, “There is a risk the backlash in CA worsens and that the company loses penetration while realizing little increased revenue per paying client there, along with potential challenges in expanding penetration in new states (and or CO and MI).”
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